The shave in rates, and doubling of the standard deduction, and an increase in the child tax credit and some other new breaks may not counterbalance the new $10,000 cap on deductions for state and local taxes. At present, all income and property taxes are deductible. […]

Rep. John Shimkus, R-Ill., who represents the 15th Congressional District in southern Illinois, asked about the state and local tax deduction cap said, “Maybe Illinois should cut their taxes.”

The first blow would come from expanding 529 college savings accounts, which offer tax advantages to encourage families to save money for college, to cover K-12 expenses, such as private school tuition and home schooling costs.

This amendment by Senator Ted Cruz passed only because of a midnight tiebreaking vote cast by Vice President Mike Pence. Under current law, earnings on contributions to 529 plans are not subject to federal taxes. These investment vehicles work well for college savings because deposits grow tax-free over a long time. Using 529 accounts for elementary or high school tuition, however, substantially shortens that period, making these accounts a minimal boost to school choice.

While this change would have only a small effect on the federal Treasury, it creates outsize impacts on the state income tax bases in the 33 states that instituted state tax deductions and tax credits to encourage 529 college savings. The federal expansion opens these state incentives to an entirely new area of expenditures, allowing private school families to funnel their tuition payments through 529s as a way to avoid state taxes. […]

Illinois, for instance, allows deductions for $20,000 in contributions a year per beneficiary to 529 plans […]

Expanding 529 plans to deliver state deductions to private school families will erode the tax base that funds public schools, affecting high-poverty schools the most. By limiting state and local tax deductions at the same time, Republicans would make it harder for states and cities to raise taxes to make up for those shortfalls.

The piece estimates this could cost New York’s state budget as much as $3 billion a year. It likely won’t be that much, but, yikes. New York has a $10,000 state income tax deduction for 529 contributions and there are 465,000 New York private school students. Illinois has a $20,000 deduction and has 279,432 private school students.

Every Republican Congresscritter in IL should be voted out. They voted yes to benefit the interests of GOP big money donors and DC lobbyist friends from outside Illinois and said to hell with the local interests back home.

Wonder if people like Peter Roskam even bother coming back to IL when they lose next November.

The tax bill could indeed hurt the State’s budget as the overall tax burden for upper-middle and high income earners increases. That would put more pressure on those earners to leave the state, which = fewer tax papers. The State income tax will now be “felt more” by those that can no longer take advantage of the SALT deduction.

Maybe Rep. Shimkus and the rest of the Illinois congressional delegation should also work to correct the large imbalance between the amount of money Illinois sends to Washington and what it receives in Federal spending. I live in his district and his repeated refusal to at least even acknowledge Illinois’ status as a donor state is an election issue for me after the current GOP tax reform efforts.

Nice to see my Congressman expressing his thoughtful concern for the people of his district. Its long past time for him to keep his term limit pledge. At least that would be doing a service for his constituents.

== Sen. Ted Cruz (R., Texas) lost a piece of his expansion of 529 education savings plans–perhaps in part because of his own words. The proposal allowed the use of the tax-advantaged plans for K-12 education and for homeschooling. The homeschooling piece fell out after Democrats challenged it and the parliamentarian ruled in

* * *

“The Cruz amendment has a modest budget impact but the impact is vastly outweighed by the profound impact as a matter of social education policy of providing federal support for home schooling for the first time,” said Sen. Ron Wyden (D., Ore.) on the Senate floor, noting Mr. Cruz’s own praise for that expansion. ==

It appears tuition paid to private schools might still be 529 eligible. Just not home school expenses.

It absolutely effects our state.
Last night corporations
Were unleashed
Restraints are gone
In restrained/regulated capitalism
Will quickly cause s financial bubble
There are any number of them
Consumer debt
Speculative investing
Retail debt
Student loan debt

The water is receding fast from the shore
The tsunami of Depression is just beyond
The horizon
Folks
Illinois is broadside on to the wave
Propulsion is minimal
Folks we’re gonna roll over

And this time we do not have the social/family/community systems in place to cope and survive.
We don’t know our neighbors

**How does the 529 savings impact the State of Illinois thought? I thought 529 savings only impacted taxable Federal income - not State income….**

Did you read the post?

“While this change would have only a small effect on the federal Treasury, it creates outsize impacts on the state income tax bases in the 33 states that instituted state tax deductions and tax credits to encourage 529 college savings. The federal expansion opens these state incentives to an entirely new area of expenditures, allowing private school families to funnel their tuition payments through 529s as a way to avoid state taxes. […]”

He must be a “great thinker” because he is a West Point graduate just like Rep. Ives.

He only broke his self imposed term limit pledge because Pres. Bush asked him to do so - how could he say no?

And let us not forget some other memorable remarks - “Corporations are my best friends” and he walked out of a State of the Union speech because he was “bored”. All the while this climate change denier and small government stalwart shows his nature by protecting the likes of a Mark Foley.

Hamlet’s ghost is right–the 529 for K-12 is still in there ($10,000/year/kid); only for tuition now and not homeschool expenses. And I don’t think College Illinois or the Illinois tax break will be automatic–the GA will have to amend our law if they want to expand the extra state tax break

The 529 language is in the final bill, allowing for tax deductible private elementary & secondary tuition payments, up to $10k/yr. The home school provisions at pg. 69 of Engrossed Senate Amd 1 (12/14/17) were removed, as shown in pg. 74-75 of Engrossed Senate Amd 1 (12/20/17). Bill text is at https://www.congress.gov/bill/115th-congress/house-bill/1/text/eas?.

@Solinica’s Backroom - thanks for clarification. I didn’t know that Illinois’ 529 deduction language applies to any Federal 529 deduction. My assumption (which was incorrect) was that the Illinois 529 had language in it like “college savings.” As such, the Illinois language would need to be changed to match the new Federal language. I guess that does not need to happen though.

Both the benefits and detriments to the new plan are not state specific. The way it will affect individuals and families and how much it will lower their taxes, increase their take home pay and make filing easier depends a lot on where geographically they live in the state of IL and especially whether they are renters or homeowners in one of the higher property tax counties. People regularly make trade-offs when they choose where to live. I predict most of IL outside of Lake, and DuPage and parts of Cook is going to be very pleased with the tax changes once they see them in action.

Maybe we should cut our taxes, and greatly increase our short and long term debt, just like the Feds.

Oh wait, we already did that in Illinois. Where was the promised jobs growth in the last three years?

Might it be that we also destroyed the trust and predictability in our business environment, by refusing to even propose, much less pass, a state budget? Uncertainty is a great barrier to investment. That’s what Illinois owners and investors are actually telling us.

Some of the powers that be (cough, cough) are willing to destroy/bleed anything and everything in order to ultimately take power/money away from public sector unions, mainly teacher unions. In turn, the Koch’s and the like gain more power and control across the states - less union money coming into elections, and a big spike of new-found billionaire dollars to fund their own agenda. It’s a win/win for them. See Koch Brother Playbook: Chapter 2.

This should make many people happy, and especially our union friends who work for AT&T in Ilinois and elsewhere:

According to CNBC, AT&T was “quick to respond” to the passage of the tax bill, which drops the U.S. corporate tax rate from 35 percent to 21:

The telecom giant said in a press release on Wednesday that it would give more than 200,000 of their U.S. union members a special bonus of $1,000. The company also increased its capital expenditures budget by $1 billion in the U.S.

“Congress, working closely with the President, took a monumental step to bring taxes paid by U.S. businesses in line with the rest of the industrialized world,” CEO Randall Stephenson said in a statement. “This tax reform will drive economic growth and create good-paying jobs. In fact, we will increase our U.S. investment and pay a special bonus to our U.S. employees.”